Correlation Between Palomar Holdings and RBACN

Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and RBACN at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Palomar Holdings and RBACN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Palomar Holdings and RBACN 775 15 MAR 31, you can compare the effects of market volatilities on Palomar Holdings and RBACN and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Palomar Holdings with a short position of RBACN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and RBACN.

Diversification Opportunities for Palomar Holdings and RBACN

-0.12

Correlation Coefficient

Palomar Holdings  RBACN

Good diversification

The 3 months correlation between Palomar and RBACN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and RBACN 775 15 MAR 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBACN 775 15 and Palomar Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Palomar Holdings are associated (or correlated) with RBACN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBACN 775 15 has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and RBACN go up and down completely randomly.

Pair Corralation between Palomar Holdings and RBACN

Given the investment horizon of 90 days Palomar Holdings is expected to generate 8.31 times more return on investment than RBACN. However, Palomar Holdings is 8.31 times more volatile than RBACN 775 15 MAR 31. It trades about 0.12 of its potential returns per unit of risk. RBACN 775 15 MAR 31 is currently generating about -0.06 per unit of risk. If you would invest  9,239  in Palomar Holdings on October 10, 2024 and sell it today you would earn a total of  1,308  from holding Palomar Holdings or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Palomar Holdings  vs.  RBACN 775 15 MAR 31

Palomar Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Palomar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

RBACN 775 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBACN 775 15 MAR 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RBACN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Palomar Holdings and RBACN

The main advantage of trading using opposite Palomar Holdings and RBACN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, RBACN can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in RBACN will offset losses from the drop in RBACN's long position.

The idea behind Palomar Holdings and RBACN 775 15 MAR 31 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.